Welcome back to another Economic Track with Zac. This installment will focus on the latest Consumer Price Index (CPI) report, an indicator for inflation. The CPI runs about a month behind, so the latest report is for July 2021. The report shows a .5% increase month-over-month on a seasonally adjusted basis. This is still rather high, but it is notably less than June’s rise of .9%. For perspective, the Federal Reserve keeps an inflation target of 2% ANNUALLY. Granted, the Fed does not use the CPI as its inflation measure, but it does factor into the calculation of the Personal Consumption Expenditures index, their index of choice. With that, Jerome Powell (Fed chairman) keeps his stance that the near-term inflation is expected and transitory. As businesses adapt to choked supply chains and catch up with demand, the Fed expects inflation to normalize down to more reasonable levels. In the event inflation does not cool off, the Federal Reserve may have to start raising rates which has the potential to shake up the stock market. As with other economic indicators, the Econ Wealth Management Investment Management Team is keeping a close eye on inflation.
Thanks for tuning into another Economic Track with Zac. Tune in next Wednesday for more updates.
Bureau of Labor Statistics. Consumer Price Index Summary. 11 August 2021. https://www.bls.gov/news.release/pdf/cpi.pdf. USDL-21-1467. Accessed 11 August 2021.